| SHOULD MY HOMEOWNER’S INSURANCE BE IN THE NAME OF MY TRUST?
READER QUESTION:
Can you please explain why my homeowner’s insurance policy should be changed after I transfer my home into my trust? My insurance company is confusing me.
MY RESPONSE:
The answer depends on the type of trust that owns your home. If your home has been transferred into a revocable living trust, there is generally no single “right” way to title your homeowner’s insurance policy. Some insurance companies list the trust as the named insured and you as an additional insured. Others list you as the named insured and the trust as an additional insured. Either approach is generally acceptable, provided the insurance company knows the home is owned by your trust and both you and the trust are properly protected.
The answer is different if your home has been transferred into an Irrevocable Medicaid Trust.
Many homeowner’s insurance policies for homes owned by an Irrevocable Medicaid Trust are written with the homeowner as the named insured and the trust as an additional insured. That arrangement is common and provides appropriate insurance coverage. However, we believe there is a better approach.
Our recommendation is that the Irrevocable Medicaid Trust be listed as the first named insured and the homeowner be listed as an additional insured. If the home is ever destroyed by a covered loss, the insurance proceeds are intended to replace a trust-owned asset. Having the trust listed as the first named insured is simply cleaner from a Medicaid planning perspective and can help avoid unnecessary questions or confusion if a claim is later paid.
The bottom line is this: whenever you transfer your home into a trust, notify your homeowner’s insurance company and ask them to review your policy. If your home is owned by an Irrevocable Medicaid Trust, ask whether they can list the trust as the first named insured and you as an additional insured. If you have questions, give our office a call. We’ll be happy to help.
I hope this helps! |
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